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Wednesday, June 30, 2010

Introduction to Trading Psychology and Emotional Discipline (Series) (VIDEO)

"Men admire the man who can organize their wishes and thoughts in stone and wood and steel and brass." - Ralph Waldo Emerson

I told you that I would be attempting to organize my instructional playlists that I have over at YouTube.

:^)

To continue in that endeavour, I am creating (and posting here today) the video that will be used to introduce the series of "Trading Psychology and Emotional Discipline". It contains a very powerful personal story of just how important this lesson is ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)


* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Monday, June 28, 2010

Monday Challenge Project Summary: June 28, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $783.51
Trading "Sister" Balance: $1,919.63
Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,128.44


Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project SAVING Account.

As I mentioned some time ago, the foundation for the Challenge Project is nearly complete. What does this mean? How will the 'foundation' being complete change the way we treat the Challenge Project accounts each week?

Well ... to date, the Challenge Project has spent much of a quarter focusing on "strengthening" one particular account out of the '
three sisters', to the abandonment of the other two 'sister' accounts for the remaining portion of quarter. Then those two 'abandoned' sisters receive attention in the next two quarters.

Beginning from this point forward, I hope to be in a position to make small adjustments to each of the three sisters, and we can look forward to growing the dividend investing and savings accounts to a "smaller" account, the trading account to a "average" account. It is hoped, that I will no longer need to take large periods of time, and only focus on one account.

Thus, the foundation is just about complete with the Challenge Project. Now we can start to think of building the actual structure on that foundation.

Trading Account:
We've grown the 'trading sister' account to $1,919.63, or away from a 'tiny account' to a 'smaller account'. As this account grows, we will begin trading more actively, and even begin day trades with a strategy that I have used in my newsletter. We're getting there, and I already have my eye on the next goal for this account, which will be $5,000.00 - at which point I consider this a 'small account'.

Investing Account:
Coca-Cola (KO) just can't seem to keep away from purchasing and acquisitions at the moment.

But that's ok. They have the cash to do so, the DRIP is on for the Sharebuilder account, and for the ThinkorSwim account, we'll be receiving a cash dividend on those shares. In addition, we'll begin to apply some deposits for rule no. two to this account as well in the future.

Savings Account:
With this weeks deposit, we have a higher amount available in the 'slush / sidepocket' fund to either the dividend investing account, or the trading account. Until the trading account profits can fund such increases, we have to rely on rule no. two to do so.

Here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $768.34
(YTD the account is -3.853% YTD Return is about -5.035% Continuing Yield is approximately +6.96% in dividends and additional shares of stock)
  • 6.1998 shares of KO (DRIP on for 4.1998 shares)
  • 5.13 shares of JNJ (DRIP on for 3.13 shares)
  • Cash: $154.53
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $136.94 cash available
  • Additional $112.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,919.63
( YTD cash contributions, equity and return up about 20.26 % )
  • 2% risk tolerance gives us $38.39 'at risk' levels
  • 3% risk tolerance gives us $57.58 'at risk' levels
  • Additional $112.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $450.30
(YTD cash equity up about 124.8 % Return on Capital is 0 %)
  • $112.00 for a Slush fund / Drawdown Kill Switch fund
  • $226.30 for a Base Savings
  • $112.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,138.27

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)


We'll be back to the Challenge Project next Monday.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Sunday, June 27, 2010

M.I.A.

Sorry, but there will be no "Week in Review" podcast this week. My wife drug me out to Metro Beach on St. Clair Shores yesterday afternoon, and this morning is absolutely packed full. I'll be working right up until I leave for my afternoon Congregation meeting, and afterwards, I'll be writing this weeks newsletter.

Perhaps I can have a podcast by mid-week ...

Friday, June 25, 2010

Friday Investing and Trading Review for June 25 , 2010

"It's not the technical analysis. It's not finding out how to play a market that you want to trade. It's about finding a market that has a profitable edge or bias that can be 'massaged'." - Personal Mantra

Although I did state that I would stop doing as many public reviews of "Airelon's Market Tactics", I didn't say that I would stop doing them completely. I still want to have a public review of my investing and trading efforts from time to time ... so here we are!

I figure I would just let everyone read my thoughts straight out of "Airelon's Market Tactics", as they existed last week. So please remember that the market comments below were written last week, so these thoughts are not current. In addition, I am not including all of my economic thoughts or portfolio management decisions. I am simply including what my thoughts were last Sunday night, for both the investing route, and the trading route.

But I figured I'd just do what I'm known for ... putting it 'all out there' for everyone to see, and we can see how I did together. I'll include my present comments after various sections with bullet points ...

_______________________________

"Outlook for the Week of June 20th, 2010
Dividend Investment Outlook for the Next Week:

We've leaped past all of those longer period moving averages, as you can see from the one hour chart of the e-mini S&P 500 futures open of the first three hours. This also clears us past heavier resistance on the daily chart with consistent trading. The next thing to keep an eye out for will be trend reversals as we approach active trading on Monday morning. For my dividend 'sister' accounts, it means that I will continue to hold my hedge for my dividend bearing 'sister' accounts; which is an August SPY 96 Put. I'll sell this put back to the market if the option sinks to .65 in worth at the open tomorrow.

  • I'm still holding that hedge, as with Monday's pop higher we never sunk to .65 on that option. The last I looked, we had a mark of 1.47. But time (theta) is ticking away. At the moment, that put option has me at about break even. I'll have comments regarding this hedge in this Sunday evenings newsletter ...

"Trading Outlook for the Next Week:

Note: By way of reminder, since the Model Portfolio has only $16,077.17, there will only be 'day trades' at this stage of the game in order to escape the risk of over-leveraged gap opens. As the 'trading sister' model account grows, we will move into 'swing trading'.

Market #1
July Sugar #11 (SBN0): I knew that pullback was coming!

Seriously, we've pulled back to the section I was waiting for. .1530 to .1525. Now, I wait for congestion on the one hour chart, and the 10 minute chart to develop. Once we begin making higher highs on the smaller time frames after such congestion, I think we will have a seasonal push higher on our hands that I'll be looking to play on the long side.

  • This worked out beautifully. As I've been a bit busy this week I didn't get to trade and catch as much of this bias as I would have liked. But still two great profitable trades to be had, any way you cut it ...


Market #2
July Corn (CN0 or ZCN0): I haven't pulled back from looking to short this market. But I am definitely moving it to the 'back-burner' as it were.

With the open this evening just rocketing higher, I would not be surprised if we move up towards the 100 period exponential moving average (ema) around the 370.25 region on the September contract before congesting.

So ... this trade hasn't moved against me yet, where I'm willing to scratch it off completely. But I'm watching Sugar more heavily at the moment, than I am Corn. As I mentioned in the beginning, let's just say I've moved Corn to the 'back-burner' as it were, and now only stalking it.
  • Well ... this worked in a rather interesting manner. As my comments describe, I was concentrating on the Sugar market. But the short opportunity definitely came in Corn, and then some. I just happened to miss it. When we popped higher by Monday morning, I just stopped watching Corn altogether. And then Monday afternoon happened, and the Corn market proceeded to plummet all week. Profitable bias, I just didn't focus enough. I'm thinking I'm going to add some more monitors, because this isn't the first time this has happened.


Market #3
August Lean Hogs (HEQ0):
We've rallied up to key exponential moving averages that act as resistance on the daily chart.

And seasonally, August Lean Hogs sees a great deal of weakness in the last half of June. It doesn't matter if you look at the 5 year, the 15 year, or the 30 year seasonal averages, the result is the same. Down.

So I'll be looking to short August Lean Hogs.

What are my trading parameters? The ideal scenario is to have an open, and a 'range' that does not violate and move higher than 83.275. Then, with such congestion, if we break below 82.075, I'd be looking to be short this market.
  • We rallied on Monday and completely broke out of my trading parameters, so I just scratched the trade completely. It then proceeded to fall all week. Again, a situation where my bias was correct, but I personally couldn't find an entrance. I think a short opportunity was there, I just wasn't focused enough on the markets this week.
_______________________________

So it ends up that I had two profitable trades in Sugar. +0.9318% and +2.027% respectively. I'll also include the updated trading money management performance statistics for the newsletter, which are included in each weeks issue. The numbers are on a "per contract", as well as percentile basis ...




* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Thursday, June 24, 2010

Trading Psychology and Emotional Discipline: Knowing How to Lose (VIDEO)

"A loser thinks a successful trade is just around the corner, and that his luck is about to turn. He keeps putting on more trades and increases his size, all the while digging himself a deeper hole in the ice. The sensible thing to do would be to reduce your trading size and then stop and review your system." - Dr. Alexander Elder, Author of "Trading for a Living"

This video will be included in my YouTube Playlist; "Trading Psychology and Emotional Discipline".

It involves the psychology, and the seeming contradiction of having to withstand some pain inside a trade that turns against you? While at the same time, cutting all losses quickly.

On the surface, those two aspects of trading may seem to contradict one another.

Therefore, in the following vlog entry I will discuss (and illustrate) the psychology and mindset of every trade I put on before put it on, while I am within the trade, and after the trade is completed ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)


Did you enjoy this entry? Do you enjoy other entries? Write a review on Investimonials!

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Wednesday, June 23, 2010

Something is on the Way ...

... at some point. I can say that much.

I had planned to have a vlog entry out today that will be included in the "Trading Psychology and Emotional Discipline" playlist. I had mentioned yesterday that it would be out today. But it's taking a bit longer to compile that I had counted on. As I had mentioned it would be out today, I wanted to put out a little note regarding the delay.

It's coming ... at some point.

At this point, I'll include a link to George Soros' comments regarding the Euro ...

Tuesday, June 22, 2010

Facelift for YouTube Organization (VIDEO)

"The five essential entrepreneurial skills for success are concentration, discrimination, organization, innovation and communication." - Michael Faraday

I have new folks coming on all the time. And the usual question I receive is:

"You have a lot of entries. Where should I get started?"

Well ... I'm slowly working at getting better organized. To that effort, today I replaced the video that appears at my YouTube Channel, so as to help ones know where they should begin, when getting acquainted with "Dan" ...

Sorry, but due to the nature of the video, I have to embed the YouTube video today, rather than the blip.tv version. ...


(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)


Tomorrow's entry, which will disucss "Knowing How to Lose", will be in the usual blip.tv format ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Monday, June 21, 2010

Monday Challenge Project Summary: June 21, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $772.98
Trading "Sister" Balance: $1,894.63
Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,092.91


Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project TRADING Account.

Trading Account:
Looking at our original strategy outlay as well as this weeks application of rule no. two to the trading account ... we're no longer a 'really tiny account' with the Challenge Project. "We're a moving on up!" I'd now consider this a 'smaller account'.

Great Dan, so when is the next trade?

Patience.

With another deposit to the trading account, I'd consider us far enough the $1,901 level to take on some risk, and have another trade as long as the risk is nice and low. A nice option trade maybe.

Investing Account:
As I noted the other day, we picked up both some cash, as well as some more partial shares for the Johnson & Johnson (JNJ) stock. We'll soon have another such incident for the shares of Coca-Cola (KO) that the Challenge Project possesses.

Here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $783.51
(YTD the account is -1.955% YTD Return is about -3.16% Continuing Yield is approximately +6.96% in dividends and additional shares of stock)
  • 6.1998 shares of KO (DRIP on for 4.1998 shares)
  • 5.1014 shares of JNJ (DRIP on for 3.1014 shares)
  • Cash: $155.61
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $138.02 cash available
  • Additional $106.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,919.63
( YTD cash contributions, equity and return up about 20.26 % )
  • 2% risk tolerance gives us $38.39 'at risk' levels
  • 3% risk tolerance gives us $57.58 'at risk' levels
  • Additional $106.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $425.30
(YTD cash equity up about 112.5 % Return on Capital is 0 %)
  • $106.00 for a Slush fund / Drawdown Kill Switch fund
  • $213.30 for a Base Savings
  • $106.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,128.44

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)


We'll be back to the Challenge Project next Monday.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Saturday, June 19, 2010

Week in Review: Relative Markets (PODCAST)

"We do not grow absolutely, chronologically. We grow sometimes in one dimension, and not in another; unevenly. We grow partially. We are relative. We are mature in one realm, childish in another. The past, present, and future mingle and pull..." - Anais Nin

Welcome to the Week in Review!

Sometimes I'll hear traders talk about where a particular market or metric is at currently, as opposed to where it was 15 years ago. This, quite honestly ... shocks me.

Why? Because economic metrics must be taken in context. I discuss this, as well as reviewing all of the movements in the capital markets, in the following podcast ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here download this podcast.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Wednesday, June 16, 2010

DRIP ... DRIP ... Cash ... DRIP ... DRIP ... Cash ...

Previous $500 Challenge Project Balances:

The Three "Sisters":

Investing "Sister" Balance: $772.98
Trading "Sister" Balance: $1,894.63
Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,092.91


* * *

We have a bit of housekeeping in regards the "Challenge Project". Dividends were paid yesterday on the Johnson & Johnson (JNJ) stock. We recieved some partial shares of Johnson & Johnson (JNJ) as well as some cash.

How? Partial DRIP, that's how.

If you're just beginning to follow me, the dividend investing "sister" account for the Challenge Project ... well ... it's sort of split into two accounts at the moment. The 'happy accident' of this situation has allowed for a 'partial DRIP' to occur. Two different 'dividend investing' accounts, one that has the DRIP turned on and receives partial shares, and the other that owns the same stock and receives straight cash.

How did this happen? How is it that I have two dividend bearing investing accounts?

Some time ago I decided to start moving my accounts to one central broker, at "ThinkorSwim", from "Sharebuilder". But as I do everything slowly and with a 'bit of deliberation', I didn't just move everything over to ThinkorSwim all at once.

I moved some money over myself. I waited, and played with their platform a bit.

I then moved the Challenge Project "savings sister" account over to ThinkorSwim. I waited a bit longer.

I then moved the Challenge Project "trading sister" account over to ThinkorSwim.

About that time, I checked with ThinkorSwim, to make sure that they engage in a DRIP program, as not all brokers have, or engage in DRIP. I discovered that ThinkorSwim does engage in DRIP, but they will not give partial shares of a company, as Sharebuilder does. Sharebuilder will dole out partial shares (In other words, the dividend will be re-invested in more shares of the company and you'll receive 2.838692 more shares of a company at $59.38) But ThinkorSwim will only reinvest into whole shares, so they'd give you 2 shares, and some cash.

When I discovered this, I decided not to ACAT my shares of Coca-Cola (KO) or Johnson & Johnson (JNJ) to ThinkorSwim at this stage of the game. But I would average down on this position, by purchasing more of each stock at ThinkorSwim.

The result, is a partial DRIP. The best of both worlds. At the Sharbuilder account for the Challenge Project sub-accounts I received 0.0286 more shares at $58.391608. So at this account, I now have 3.13 shares of Johnson & Johnson (JNJ). At the ThinkorSwim account, I received $1.08 for 2 shares of Johnson & Johnson (JNJ).

New Three "Sisters" Project Balances:

Investing "Sister" Balance: $782.51
Trading "Sister" Balance: $1,894.63
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $3,101.36

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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Tuesday, June 15, 2010

Pay It Forward ...

Everything I do here on this blog ... is for free. I never charge money for talking about what I have discovered works, when it comes to investing and trading. I've discussed How to Begin, Money Management, Investing, Psychological discipline, Commodity Futures and much, much more. I've often told ones " I always swore that if I "ever figured this trading and investing thing out" - I'd share what I learned with others."

And so I have.

I've heard from a few folks, that would like to give me cash money in gratitude, which I do not accept.

But then again ... perhaps there is a way ones can "pay it forward" so to speak, and do so cheaply ...

Tamela Rich will be leaving soon on a motorcycle trip across the country. She and Matt "Miss Trade" Davio are writing a book together: "Tradeoff's: Leveraging the Longs & Shorts of Life". She will cross 8,000 miles, 20 states and three time zones to meet with Matt in Oregon. At the same time, she will be joining motorcyclists from across Canada and the United State to raise money for the National Breast Cancer Foundation.

When her Facebook page reaches 1000 "likes", she'll be donating $200 to the National Breast Cancer Foundation.

So if you have a Facebook Page? If you want to "pay it forward" a bit to what I've done here? Check out / "like" Tamela's Facebook Page ...


Monday, June 14, 2010

Monday Challenge Project Summary: June 14, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $768.32
Trading "Sister" Balance: $1,869.63
Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,063.25


Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project TRADING Account.

Trading Account:
Oh ... so ... close.

We break into the next 'phase' for the Trading account (From the 'tiny account' phase, to the 'very small account' phase) at $1,901.00. We're almost there.

And as we are getting ready to break into this region on our trading account, there's no way I'm going to take a trade. One more application of rule no. two to the trading account, and we'd be there. A trade now risks a loss. A loss would increase the amount of time necessary to cross into this new 'plateau' of account size.

Sorta stinks too, because there is a nice, low risk, assymetrical-risk trade that I'm looking at for myself ...

Investing Account:
As I mentioned last week, we're in a time period that we have to be prepared for account drawdown.

The beautiful thing about the Challenge Project overall? Is that we are now approaching (we're not there yet) to a level where I will not have to ignore two accounts in a quarter, just to focus on the account that needs help with rule no. two.

In other words ... the "foundation" is close to being constructed.

So while I will have deposits towards the 'investing account' next quarter? We'll also be able to spread rule no. two to the savings and trading accounts, almost equally.

Again ... the "foundation" is close to being constructed for the Challenge Project.

Here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $772.98
(YTD the account is -3.272% YTD Return is about -4.462% Continuing Yield is approximately +6.96% in dividends and additional shares of stock)
  • 6.1998 shares of KO (DRIP on for 4.1998 shares)
  • 5.1014 shares of JNJ (DRIP on for 3.1014 shares)
  • Cash: $154.53
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $136.94 cash available
  • Additional $106.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,894.63
( YTD cash contributions, equity and return up about 18.7 % )
  • 2% risk tolerance gives us $37.89 'at risk' levels
  • 3% risk tolerance gives us $56.83 'at risk' levels
  • Additional $106.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $425.30
(YTD cash equity up about 112.5 % Return on Capital is 0 %)
  • $106.00 for a Slush fund / Drawdown Kill Switch fund
  • $213.30 for a Base Savings
  • $106.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,092.91

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)


We'll be back to the Challenge Project next Monday.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Saturday, June 12, 2010

Week in Review: Shipping Metrics and Causality (PODCAST)

"We are too much accustomed to attribute to a single cause that which is the product of several, and the majority of our controversies come from that." - Marcus Aurelius

Welcome to the Week in Review!

Front Line Ltd. (FRO), a company that owns and manages oil tankers ... well ... their stock has headed higher last week. As well, the price of Crude Oil creeps up a bit higher. The mainstream financial media reports that naturally, Frontline's stock (FRO) is heading higher because Oil is heading higher.

Really?

Seriously?

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here download this podcast.

Here is the link to a page
that displays the "Vessel Spot Rate" for Crude Carrying vessels.

Here's the link to my newsletter's "landing page" so that one's can at least find out exactly what this "newsletter" is all about.

Here's the link to Matt blog: "Fundamental Trading Diary". He had a recent fascinating entry regarding the Canadian economy heading down the same track that the U.S. Economy did, oh ... a few years back.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Friday, June 11, 2010

Zzzzzzzz ....

Man ... the equities markets have just ... died. And not to add to the current blatherpanic that is out there right now, but honestly ... if this is our June 'relief' rally ... then ... uhhh ...

I find the "buzz" of the last two weeks in the equities markets rather humorous though. Because if we get the slightest up day, I begin to hear how "dumb" the bears are. And the opposite holds true. If we are down 5 points on the SPX, then those "bulls sure must be delusional". All I know, is that as of today the VIX is falling.

Myself? Until we close above 1107 on the SPX, or close below 1040, then I'm not convinced one way or another. Everything else is just noise. As a matter of fact, it was that same noise that stopped my beautiful profit streak when it came to hedging out my dividend bearing stuff. For a while there, I was a hedging machine.

I'd purchase a hedging instrument ... it would turn out profitable, and I'd take my money.

Rinse.

Repeat.

Unfortunately, that can lead people to think that the hedging instrument itself should always be profitable. They're not, and they won't be. That's not the value of a hedge. The intrinsic value of a hedge, is that when you're worried, you can buy some insurance. But insurance policies aren't always cashed in. You are not making claims against your auto insurance every month, simply because you paid your auto insurance policy. You're not gathering cash on your homeowners insurance simply because you're all 'paid up'. So I repeat ...

The intrinsic value of using a hedging strategy as 'insurance' ... is that it is insurance.

Regardless, as I was saying ... I had bought an option as a hedge against the dividend bearing stuff some time ago. Since the market has traveled sideways however, it just destroyed the theta value on the option, so I had to sell it back to the market for a loss of 1.50 on the option. But I weighted myself appropriately, so I'm more than happy to pay the 'insurance premium' as it were.

Tomorrow is the "Week in Review" podcast ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Thursday, June 10, 2010

General Mills (GIS)

One of my biggest regrets lately, is that I couldn't get folks who follow the Challenge Project to see how much I've been eyeing up General Mills (GIS) as of late, before the stock split. There was just no way that the Challenge Project could support such a purchase before that split for money management and portfolio management reasons. As many of you no doubt know, this is a stock that is held by the Model Portfolio of Airelon's Market Tactics.

The real advantage of a stock split, is for future growth compounding possibilities for dividend investors. It acts as a multiplier on future DRIP purchases.

As of right now, I have an order out there to to buy 3 General Mills (GIS) for the Challenge Project dividend 'investing sister' account at $38.04 Stop Limit on a day order. We'll see if it gets filled or not.

If it does get filled, the incentive to build cash for the Investing account increases to an even greater extent next quarter.

Edit: Hit my price, but as I had a limit order (and what turns out at the high of the day), I was not filled. I have since cancelled the order.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Monday, June 7, 2010

Monday Challenge Project Summary: June 7, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $770.61
Trading "Sister" Balance: $1,844.63

Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,040.54


Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project TRADING Account.

Trading Account:
We're oh so close to getting to the next 'phase' of growth for the Trading account. I probably won't be trading in the Challenge project until rule no. two carries the 'trading sister' account to that next plateau of more than $1,900.00.

Investing Account:
It's time to psychological prepare for drawdown for the 'investing sister'. The size of the "Challenge Project" accounts is so small, that in order to defend this account for the drawdown (that I feel is going to only increase in coming months) will be to focus on applying rule number two to the investing sister account. And we'll do that ... next quarter.

Overall, I'm very pleased with the structure of the the Challenge Project at this point. As I've mentioned before, we are almost ... almost to the point where the 'foundation' for the Challenge Project would have been laid.

Here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $768.32
(YTD the account is -3.855% YTD Return is about -5.032% Continuing Yield is approximately +6.96% in dividends and additional shares of stock)
  • 6.1998 shares of KO (DRIP on for 4.1998 shares)
  • 5.1014 shares of JNJ (DRIP on for 3.1014 shares)
  • Cash: $154.53
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $136.94 cash available
  • Additional $106.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,869.63
( YTD cash contributions, equity and return up about 15.56 % )
  • 2% risk tolerance gives us $37.39 'at risk' levels
  • 3% risk tolerance gives us $56.08 'at risk' levels
  • Additional $106.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $425.30
(YTD cash equity up about 112.5 % Return on Capital is 0 %)
  • $106.00 for a Slush fund / Drawdown Kill Switch fund
  • $213.30 for a Base Savings
  • $106.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,063.26

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)


We'll be back to the Challenge Project next Monday.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Saturday, June 5, 2010

Week in Review: It's the U.S. Dollar (Again) (PODCAST)

"For in much wisdom is much grief; and he who increases knowledge increases sorrow." - Ecclesiastes 1:18

Welcome to the Week in Review!

Naturally ... everyone's eye was on the stock market and the drop of 37.95 points on the S&P 500. As loyal blog readers ... you however, knew to keep your eye on much more than that ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here download this podcast.

Hey ... I understand people won't want to listen because they wanted there to be runaway inflation (Also as I outlined). It's not a popular message. But there have been a few of us talking about exactly what is going on. In fact, just a few weeks ago I was talking about this publicly, outside of the scope of the newsletter ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Friday, June 4, 2010

Technical Analysis Mumbo Jumbo Tea Leaf Readings (VIDEO)

"Much of technical analysis is magical mumbo-jumbo that people think will tell them where the markets going. And it never will. It's just a bunch of nonsense. Unfortunately, I've also participated in it" - Larry Williams

From time to time, someone will get a hold of me, and ask me to analyze a trade for them. Either it's a trade they are thinking of taking, or a trade they are in. Then they ask for what I think of their chart.

The first thing I think? Is that I'm seeing a lot of mumbo-jumbo tea leaf reading. I discuss that in the following vlog entry, as well as why you are not seeing a "investing and trading review" video ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Thursday, June 3, 2010

Crimping My Style Man!

Yeah, as my wife and I are doing well as of late ... she's been taking more and more time off of work.

I've already discussed at length, some of the 'draw down' of working from home; on numerous occasions.

Needless to say, between her "honey do" list as well as her ready access to my 'workspace' ... this has put a bit of a 'crimp' in my blogging efforts. But expect to see an entry tomorrow ...

Tuesday, June 1, 2010

Storm Clouds on the Horizon

$500 Challenge Project Balances:

The Three "Sisters":


Investing "Sister" Balance: $770.61

Trading "Sister" Balance: $1,844.63

Interest Bearing "Sister" Balance: $425.30

Total Challenge Project Funds: $3,040.54


Yes, I've been gone for a few days. The wife's aged grandparents needed help around their home. Painting exterior windows. Replacing winter glass with window screens. Cleaning some rooms. The kitchen drain needed work. So we took advantage of the long weekend, and traveled back to her grandparents house to help out around their house. I was actually going to shoot over and visit with "Ohio1998" in Pittsburg, but we carpooled with other family members, and never even really had the time away from the grandparents that I could have spent elsewhere. Sorry Derek.

I figure that the “State of the Economy” video I had last week would sort of sum up my thoughts well enough, so that a “Week in Review” podcast was not really necessary. And since the thirty first of May is the fifth Monday of the month of May, then we have already exhausted the Challenge Projects' “rule number two” for the month (I will say that any dividend investors should be prepared for further drawdowns on their dividend accounts. I know I am).

But allow me some some space here to clarify some of my comments from my “State of the Economy” entry.

For some reason, through private messages (pm's), comments and emails, ones seem to feel that I have suddently turned bullish on the entire economy and the markets.

So let's back up just a bit.

I don't think in a linear manner. That is why I don't predict. People who use linear models predict. I don't. So when I see storm clouds are on the horizon, it means I go about preparing for this possibility. This doesn't mean the storm 'will blow into our neck of the woods', or that the storm will even materialize at all. But the storm clouds are on the horizon and a prudent person is prepared for that eventuality.

I was not saying that 'the recovery is on'. I believe my comments were that we could have one final deflationary flush and then we could begin to discuss being in the 8th or 9th inning of this entire mess.

A deflationary flush is not a pretty affair. Not in the slightest.

But if you're going to make money with investing and trading, you have to decide what scenarios will lead you to purchase an asset.

It's all well and good to talk about fear, and horrendous market conditions as well as 'concerns for the economy'. But if you never look beyond the fear, then it becomes impossible to look for situations that you can purchase assets so that you can .. I don't know … make money?

To my mind, it's just a question of how much volatility we'll see, and how much continued government interference.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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